Retirement planning is crucial for financial security, and choosing the right pension plan can make a significant difference. LIC (Life Insurance Corporation of India) offers several single premium pension plans that provide a steady income post-retirement. In this article, we will compare different LIC pension plans available in April 2025, using an example of a 50-year-old person investing ₹1 Crore. We will also analyze whether investing in Mutual Funds’ Systematic Withdrawal Plan (SWP) can generate better returns.
📌 Watch the full comparison in our YouTube video below:
LIC Single Premium Pension Plans Comparison 2025: Best Retirement Investment?
1. Understanding LIC Single Premium Pension Plans
LIC provides multiple pension plans where you can invest a lump sum and receive a regular pension. Let’s look at four popular single premium pension plans offered by LIC:
- Smart Pension – Option A (Plan No. 879)
- New Jeevan Shanti (Plan No. 758)
- Jeevan Akshay-VII – Option F (Plan No. 857)
- Smart Pension – Option F (Plan No. 879)
Each plan differs in terms of annuity payout, return of purchase price, and pension interest rates. The table below summarizes the comparison:
| Plan Name | Smart Pension (Option A) | New Jeevan Shanti | Jeevan Akshay-VII (Option F) | Smart Pension (Option F) |
|---|---|---|---|---|
| Plan No. | 879 | 758 | 857 | 879 |
| Annuity Option | Immediate for Single/Joint Life | Deferred for Single/Joint Life | Immediate for Single/Joint Life | Immediate for Single/Joint Life |
| Deferment Period | None (Immediate) | 1 Year | None (Immediate) | None (Immediate) |
| Purchase Price (₹) | 1,00,00,000 | 1,00,00,000 | 1,00,00,000 | 1,00,00,000 |
| Monthly Pension (₹) | 60,560 | 55,960 | 54,125 | 51,680 |
| Quarterly Pension (₹) | 1,83,572 | 1,69,629 | 1,63,525 | 1,56,655 |
| Half-Yearly Pension (₹) | 3,70,930 | 3,42,755 | 3,30,250 | 3,16,540 |
| Yearly Pension (₹) | 7,57,000 | 6,99,500 | 6,74,500 | 6,46,000 |
| Pension Interest (%) | 7.57% | 7.00% | 6.75% | 6.46% |
| Return of Purchase Price on Death | Pension stops on death | Return of purchase price | Return of purchase price | Return of purchase price |
Key Takeaways from LIC Pension Plans:
✔ Higher pension payouts are available under the Smart Pension (Option A) plan. ✔ Deferred annuity plans (New Jeevan Shanti) provide slightly lower monthly pensions but return the purchase price to nominees. ✔ Pension interest rates range from 6.46% to 7.57%, depending on the plan. ✔ Before buying any pension plan, consulting a financial advisor is recommended.
2. Mutual Funds vs. LIC Pension Plans: Which is Better?
Many investors prefer Mutual Funds’ Systematic Withdrawal Plan (SWP) instead of traditional pension plans to achieve better growth. Let’s compare LIC’s New Jeevan Shanti Plan with an SWP-based investment.
| Investment | New Jeevan Shanti (LIC) | Systematic Withdrawal Plan (SWP) |
| Starting Age | 50 Years | 50 Years |
| Deferment Period | 1 Year | 1 Year |
| Amount After 1 Year | ₹1.07 Crore | ₹1.12 Crore (Pessimistic) |
| Expected Returns (%) | 7% | 12% |
| Monthly Pension (₹) | ₹55,960 | ₹75,000 |
| Money Returned (Age 55) | ₹1 Crore (Withdrawn ₹33.58 L) | ₹1.36 Crore (Withdrawn ₹45 L) |
| Money Returned (Age 60) | ₹1 Crore (Withdrawn ₹67.15 L) | ₹1.67 Crore (Withdrawn ₹90 L) |
| Money Returned (Age 70) | ₹1 Crore (Withdrawn ₹1.34 Cr) | ₹5.64 Crore (Withdrawn ₹1.8 Cr) |
Key Takeaways from Mutual Fund SWP:
✔ Higher Monthly Pension: With 12% expected returns, mutual funds allow for a higher monthly withdrawal. ✔ Wealth Growth Potential: While LIC pension plans provide a fixed payout, Mutual Fund SWP grows significantly over time. ✔ Market Risks: Mutual Funds returns are not guaranteed and depend on market conditions. ✔ Liquidity Advantage: You can withdraw funds anytime, whereas pension plans have limited flexibility.
3. Should You Choose LIC Pension Plans or Mutual Funds?
The decision depends on your risk appetite and financial goals:
- ✅ Choose LIC Pension Plans if you want a guaranteed, risk-free pension for life.
- ✅ Choose Mutual Fund SWP if you are comfortable with market risks and want higher potential returns.
4. Conclusion: Best Retirement Investment Plan for 2025
LIC’s Single Premium Pension Plans provide a safe and secure retirement income. However, if you want higher returns and wealth accumulation, Mutual Fund SWP could be a better alternative. Always consult a financial advisor before making any investment decision.
LEGAL DISCLAIMER:
Past performance may or may not be sustained in the future and is not a guarantee of any future returns. The information provided is for illustration purposes only and should not be considered financial advice. Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
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